THE FINANCIAL MANAGEMENT SERVICE 

DEPARTMENT OF THE TREASURY 

The mission of the Financial Management Service is to improve the quality of 

Government financial management. Our commitment and our responsibility is to help 

our Government customers achieve success. We do this by linking program and 

financial management objectives, and by providing financial services, information, 

advice, and assistance to our customers. We serve taxpayers, the Treasury Department, 

Federal program agencies, and Governmerit policy makers. 
.,. 

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For sale by the U.S. Government Printing Office 

Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328 

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table of 

contents 

discussion 

and 

analysis 

consolidated 

financial 

statements 

notes to 

financial 

statements 

Secretary's Statement .... ..... .. ... ....... .... .. ...... . . .. . .. .. . .... .. . 1 

Comptroller General's Statement .................. . .......... ... ......... 2 

Economic and Budget Results in Fiscal 1994 ... ......... . . .... .. ....... . .... 3 

Charts and Graphs: 

Revenues and Expenses .. . .... ..... .. .... .... ........ . . .... .......... . 6 

Major Categories of Assets . . ....... .... . .. ..... . ... .... .......... . .... 7 

Gross Accounts and Loans Receivable . . .... . .. . .. ..... .. .... ..... .. . . . .. 8 

Commitments and Contingencies ....................... .. ............... 9 

Federal Debt ............. ... ..... . ...... . ..... ..... .. ..... .. ....... 10 

Statement of Financial Position ......... . ...... .. ...... . ... .... .... . ..... 11 

Statement of Operations . .. .. . ........... . ..... ..... .. .. ... .. . . .. ... ... 12 

Summary of Significant Accounting Policies ............................... 13 

Cash ...................................................... . ..... ... 14 

Other Monetary Assets ..... .. ... .... ..... ....... .. ..... ..... .......... 14 

Accounts and Loans Receivable ......................................... 14 

Inventories and Related Properties . ...... ... ...... . .......... ......... ... 14 

Property, Plant, and Equipment. .......... .. ... ............ . ...... .. . .. .. 15 
• 

Other Assets . . ... .... . . . .. ..... . .. ... . . . . . ... ..... .. .... . ... . .... .... 16 

Unearned Revenue ... . ...... .. . . . . ...... .. .... .. . ..... .. . . . . ... .. ..... 16 

Federal Debt Held by the Public . . . . ... . ... .. . . ... .. . . .. .. ...... . . . .... . . 16 

Pensions and Actuarial Liabilities . . . ... . . .... ..... ... . . . .. .. ..... .. . ... .. 19 

Other Liabilities ... . .... . . . . .. .. . ... .. .. .. . . . .. .. . . . .. . . . .. . .. .. .. .... 22 

Accumulated Position . . . ....... . ... ..... .. . ... .... . . . .. ............... 22 

Leases ... . . . ..... . ...... .. .. .. .... ... . .. ..... .. ... .. . .. ... . ...... .. 22 .

Social Security and Medicare Security .. . ..... . . .. . ... .. .. . . .. . ... .... .. .. 23 

Commitments and Contingencies .. . .. ... . ..... ... . .... ... ....... . . .. .. .. 23 

Independent Accountants' Report . . ..... . ... . .. . .. . .. . . . ........ . .... .. .. 27 

supplemental tables 

Additions to Non-Federal Economic Resources .. . .. ...... .. . . .... . .. ... ... . 29 

Estimates for Tax Expenditures in the Income Tax .. .. . . ......... . . . ... .. .. . 31 

Outlays for Mandatory and Related Programs . . . ... .... . .. . . . . . ... . .... . ... 32 

Federal Obligations ....... . .................................. . ..... ... 33 
• 

-, 

cfs statement 

from the secretary of the treasury ... 

• 

STATEMENT OF THE 

SECRETARY OF THE TREASURY 

The Department of the Treasury is pleased to present the "Consolidated Financial 

Statements of the United States Government, Prototype 1994." These unaudited 

Statements, which provide summary information on Federal operations and 

financial position on an accrual basis, were prepared by the Financial 

Management Service (FMS). 

In the past year, significant progress has been made toward establishing uniform 

accounting standards for all Federal agencies. The implementation of these 

accounting standards, which constitutes a major challenge, will improve the quality 

of the financial data presented in future Statements. 

In 1994, paperwork was reduced and reporting simplified. For the first time, 

agencies electronically transmitted adjusted trial balances to FMS. This saved time 

and resources by replacing manual tasks with an automated system. 

In addition, the Federal Accounting Standards Advisory Board (FASAB) will 

recommend a comprehensive set of new accounting standards for the Federal 

Government by the end of 1995. Meanwhile, the Office of Management and 

Budget is taking action to accommodate the new financial concepts and 

accounting standards. 

The Government Management Reform Act of 1994 directs all major Federal 

agencies to prepare audited financial statements for fiscal 1996 by March 1, 1997. 

It also mandates that Treasury issue the first audited Government-wide financial 

statements covering fiscal 1997, by March 31 , 1998. 

Treasury is working diligently with the Office of Management and Budget and the 

General Accounting Office to meet those mandates. A Task Force made up of 

agency CFOs and IGs is also providing valuable advice to ensure that all 

necessary financial information is available for the Government-wide audited 

statements. 

This is a challenging time for Federal financial management. The effort to improve 

the quality of Federal financial statements has become a high priority for all 

agencies. It is our hope that these improvements will allow us to serve the public 

more effectively. 

Robert E. Rubin 

1 
2 statement cfs 

from the comptroller general. .. 

Comptroller General 

of the United States 

Washington, D.C. 20548 

We are pleased that as a result of the Government Management Reform Act (GMRA) of 

1994, all 24 major federal agencies will for the fi rst time in fiscal year 1996 prepare and 

have audited financial statements covering their entire operations. The discipline of 

annually preparing and auditing agencywide fi nancial statements, as first required by the 

Chief Financial Officers (CFO) Act of 1990 for pilot agencies, has proven to be successful 

in highlighting weaknesses and high-risk areas, providing more realistic assessments of 

agencies' finances, and improving both the usefulness and reliability of fi nancial 

information. 

Over the next few years, as agency financial managers work to implement this mandate, 

they will need to ( 1) build integrated information systems capable of producing reliable 

financial, cost, and performance information, (2) establish effective systems of internal 

control to better control risks, and (3) develop more effective fi nancial organizations with 

the strong leadership needed to produce auditable fi nancial statements and provide quality 

services in an efficient manner. 

GMRA also requires a consolidated set of annual governmentwide financial statements to 

be prepared by the Department of the Treasury and 'audited by GAO beginning with fiscal 

year 1997. These new statements will replace the accompanying unaudited prototype 

fi nancial statements, which have limited usefulness and reliability. These statements are to 

refl ect new accounting, cost, and fin ancial reporting standards that the Federal Accounting 

Standards Advisory Board designed specifically for the unique circumstances of the federal 

government. The agency statements and other financial re·ports reflecting these new 

standards will enable decisionmakers to more effectively manage government operations 

and provide a clearer and more reliable picture of the overall state of the federal 

government's finances and its stewardship of national resources. 

Overall, progress is being made to improve the fi nancial management of our national 

government, but much more remains to be done. For example, a number of agencies, 

including the Department of Defense, have not moved quickly to improve the financial 

systems essential to delivering the cost and performance information government managers 

and policymakers need. Only by enhancing the momentum to achieve the goals of the CFO 

Act can the national government put in pl ace the strong fi nancial management and 

accountability our citizens deserve. Better financial management will improve government 

operations, save tax payer dollars, and help restore confidence in the government. 

Charles A. Bowsher 
... 

• 

cfs discussion and analysis 

discussion and analysis 

Economic and budget results for fiscal 1994 

ECONOMIC GROWTH ACCELERATED THROUGH FISCAL 1994 as the recovery went into full 

swing. Employment growth picked up and the unemployment rate dropped by almost a 

full percentage point. Inflation remained subdued and financial conditions were very 

favorable. The Federal budget deficit 

dropped sharply as the full effects of 

the 1993 deficit reduction package began to take hold and the stronger 

economy generated higher 

revenues. Improvement in 

the deficit continued 

into fiscal 1995. 

The economy in 

fiscal 1994 

Real gross domestic 

product (GDP) grew by 

4.4 percent across the 

four quarters of fiscal 1994, much faster 

than the 3.0 percent increase over the 

four quarters of fiscal 1993. Growth was 

led by a boom in business investment 

spending for equipment, which increased by more than 17 percent over 

the four quarters of the fiscal year. Consumer spending was also strong, especially for purchases of automobiles and 

other consumer durables. The housing 

sector contributed to the stronger pace 

of GDP growth in fiscal 1994 as well, 

with the value of real residential construction rising by more than 9.0 percent 

over the fiscal year. 

3 
4 discussion and analysis 

These sectors were spurred by historically low long-term interest rates at 

the start of the fiscal year. Through the 

course of the prior fiscal year, longterm interest rates fell by 134 basis 

points, the result of a strong program 

of deficit reduction and reduced inflationary expectations. By the first quarter of fiscal 1994, Jong-term interest 

rates were at 25-year lows. Rates 

moved up through the course of the fiscal year as economic growth accelerated, but have since moderated. 

Employment growth strengthened 

in fiscal 1994, with 3-1/2 million new 

jobs added to the economy compared 

with just under 2-1/2 million in fiscal 

1993. Most of those jobs were in the 

private service-producing sector of the 

economy, with especially strong 

growth in business services. The manufacturing sector added 300,000 new 

jobs after remaining virtually unchanged through fiscal 1993. The unemployment rate fell to 5.8 percent by 

the end of the fiscal year from 6.7 percent at the end of fiscal 1993, although 

a change in the survey method sug-

gests that the earlier rate may have 

been even higher. 

Broad measures of inflation remained very subdued in fiscal 1994. 

Consumer prices increased by 3.0 percent over the year, just slightly ahead 

of a 2.7 percent advance in fiscal 

1993. Excluding food and energy, the 

"core" rate of inflation was also 3.0 

percent, and this was a bit lower than 

the 3.2 percent in the previous year. 

Producer prices were also well-behaved. Growth of the fixed-weighted 

price index for GDP remained at 2.9 

percent across the four quarters of fiscal 1994, the same as during the prior 

fiscal year and below rates of 3.1 percent and 3.8 percent in the prior 2 fiscal years. 

The economy was accelerating as 

fiscal 1995 began. Growth in the first 

quarter of the 1995 fiscal year reached 

an unsustainably high rate, and has 

since eased back to a level that is more 

consistent with the economy's longterm potential trend. Inflationary pres

-

sures briefly flared up, particularly at 

early stages of processing, but those 

have also abated and the Federal Reserve was able to ease monetary pol-

. icy slightly. The economy appears to 

be on a moderate growth track that is 

compatible with low inflation. 

Budget results 

For the second year in a row, the 

Federal budget deficit narrowed significantly in fiscal 1994. The deficit 

declined by almost $52 billion to 

$203.3 billion, the lowest in 5 years. 

This followed a decline of $35.3 billion in fiscal 1993. 

The large improvement in 1994 resulted from passage of the President's 

Economic Plan in 1993 (the Omnibus 

Budget Reconciliation Act) as well as 

from the speed-up in economic growth 

over the course of the year. The 1993 

Budget Act provided for $505 billion 

in total deficit reduction across the 5 

years ending in fiscal 1998 from what 

otherwise would have occurred. That 

figure was about evenly split between 

increases in receipts and curbs on 

growth of spending. 

Growth of outlays was held to $52 

billion in fiscal 1994, or 3.7 percent, 

but that figure would have been even 

lower if large asset sales in the deposit 

insurance account had not held down 

outlays in fiscal 1993, and if not for 

some timing shifts in fiscal 1994. A 

more accurate measure of underlying 

budget trends is reflected by excluding 

the timing differences and the outlays 

of the deposit insurance agencies. On 

that basis, outlays increased just $26 

billion in fiscal 1994 and the deficit 

narrowed by more than $78 billion, indicating even greater progress in deficfs 
cfs 

cit reduction than the $52 billion implied by the overall figures. 

Growth in outlays in fiscal 1994 was 

held down by declines in such areas as 

defense, farm support payments, and unemployment insurance benefits. Income 

support payments continued to advance. 

Growth of total health care spending 

had slowed significantly in fiscal 1993 

and slowed further in 1994. Spending 

on Medicare rose at a more rapid rate in 

fiscal 1994 than in the previous fiscal 

year, but all other categories of Federal 

health expenditures, including Medicaid, posted much slower rates of gain. 

discussion and analysis 

Receipts increased by a solid 9.0 percent, well above the 5.8 percent increase in fiscal 1993. Growth in 1994 

. was led by a 19.5 percent advance in 

corporate income tax receipts. Withheld 

individual income and employment tax 

receipts rose by 7 .2 percent. 

The fiscal 1994 deficit dropped to 

3.1 percent as a share of GDP from 4.1 

percent in the previous fiscal year. Further improvement has occurred through 

fiscal 1995. The deficit is projected to 

fall by $43 billion in fiscal 1995 to 

about $160 billion, or just 2.3 percent 

of GDP. This would represent the lowest share of GDP since 1979. 

5 
6 discussion and analysis cfs 

Revenues and Expenses 1800~-----------~ 

1600 

1400 

1200 

1000 

800 

600 

400 

200 

0 

The chart at right shows the amounts of the 

U.S. Federal Government revenues and 

expenses for fiscal 1994. The charts below 

show categories of revenues by source, and a 

breakdown of the Government's expenses by 

agency. All charts are in billions of dollars. All 

revenues levied under the Government's 

sovereign power are reported on the cash 

basis. Revenues earned through Government 

business-type operations and the data 

supporting the graph of expenses by agency 

are reported on the accrual basis. Revenues Expenses 

600~------------------------~ 

500 

400 

300 

200 

100 

0 

Individual 

income 

taxes 

Social Insurance 

taxes and 

contributions 

Sources of Revenues 

Corporate 

income 

taxes 

Businesstype 

operations 

Other 

400~----------------------~ 

300 

200 

100 

0 

Categories of 

Expenses 

-100 ~-----------------------~ Agri- Department HHS, 

culture of except 

Defense Social 

Security 

HHS, lndepenSocial dent 

Security agencies ' 

Interest 

on the 

public 

debt ' 

Veterans 

Affairs ' 

1 Includes EPA, GSA, NASA, OPM, SBA, and other independent agencies. 2 Does not include interest on investments held by Government agencies. 3 Refer to Veterans Affairs adjustment for actuarial liability change, and footnote 2, page 12. 4 Departmental agencies with expenses less than $50 billion. 

Other' 
cfs discussion and analysis 

Major Categories of Assets 

as of September 30, 1994 

Assets are resources owned by or 

owed to the Federal Government that are 

available to pay liabilities or to provide future public services. The chart below is derived from the Statement of Financial 

Position (page 11 ). It depicts the major 

categories of assets as of September 30, 

1994, as a percentage of total assets. The 

components for each of these categories 

are contained in Notes to the Financial 

Statements. 

Total Assets: 

$1,355.9 billion 

Cash and other 

monetary assets 

--------- 13% 

Receivables 

14% 

Property, plant, 

and equipment 

44% 

Assets, Liabilities, 

and Accumulated 

Position, as of 

September 30, 1994 

The chart at right depicts assets, liabilities, and accumulated position reported in the 

Statement of Financial Position, 

as of September 30, 1994. 

4000 

2000 

0 

-2000 

-4000 

Advancements, 

prepayments, and 

other assets 

12% 

(In billions of dollars) 

7 
8 discussion and analysis cfs 

Gross Accounts and Loans Receivable 

as of September 30, 1994 

The amounts in these graphs were derived from the agencies' adjusted trial balances (ATB) as reported on the Federal 

Agencies' Centralized Trial-Balance SysTreasury 

(primarily truces 

receivable) 

53% 

Loans Receivable 

Total: $181.4 billion 

Agency for International 

Development 8% 

Housing and Urban 

Development 11 % 

Education 7% --

Other 16% 

• Includes Executive Office of the President. 

tern (FACTS). These amounts, less allowances, are included in the Statement of Financial Position on page 11 . 

Accounts Receivable 

Total: $144.5 billion 

Energy 7% 

Defense 2% 

Health and Human 

Services 15% 

Labor 6% 

Funds appropriated 

to the President 3% * 

Other 14% 

Agriculture 

(Primarily Farmers 

Home Administration) 

58% 
cfs 

Commitments 

and Contingencies 

discussion and analysis 

For a breakdown of the figures illustrated in these 

charts, see Commitments and Contingencies of the 

United States Government for the Year Ended September 30, 1994, on pages 25 and 26. 

Commitments 

Total: $398.6 billion 

Education 

6% 

Health and 

Human Services 

Long-term contracts 

4% 

Transportation 

4% 

Unadjudicated claims and 

other contingencies 

5% 

Government loan and 

credit guarantees 

10% 

Housing and Urban Development 

48% 

Contingencies (at face value) 

Total: $6.1 trillion 

Insurance 

85% 

(see breakout below.) 

Insurance components 

Savings Association 

Insurance Fund 

(SAIF) 13% 

Bank Insurance 

,,- Fund (BIF) 

37% 

1--- ---'xc-~=:l- Other Pension Benefit 1 % 

Guarantee Corp. 

18% - VA 10% 

National Credit \__ Federal Emergency 

Union Administration __/ \ Management Agency 

(NCUA) 5% Transportation 11 % (FEMA) 5% 

ibt: ~ ())(6 ~bliJ)~u( 1' ,.. 

~pAG,t,_ 

9 
10 

~lNFo~ 

' ~

0 11 ~ 

(16.is: 

.st'E:pAG~ 

discussion and analysis 

Federal Debt 

The following charts represent different 

facets of the net Federal debt, excluding 

intragovernmental investments. For a 

Federal Debt 1994 Held by the 

Public, Fiscal 

1993 1990-1994 

(In billions of dollars) 1992 

1991 

1990 

0 1000 

1994 

1993 

1992 

1991 

1990 

cfs 

breakdown of the Federal debt, see the 

tables on pages 17 and 18. 

2000 3000 4000 

Interest Expense 

for Federal Debt 

Held by the 

Public, Fiscal 

1990-1994 

(In billions of dollars) 

0 50 100 150 200 250 

2000 

1800 

1600 

1400 

1200 

1000 

800 

600 

400 

200 

0 Notes 

Types of Securities as of 

September 30, 1994 

(In billions of dollars) 

Bills Bonds Non- Agency & 

marketable other 
cfs consolidated financial statements 

consolidated financial statements 

United States Government 

Consolidated Statement of Financial Position, 

as of September 30, 1994 

(Unaudited) 

(In billions of dollars) 

Assets 

Cash .. ...... · ......... .. .. .. . . ... .. ..... .. .. . ... .. ...... . .. .. . 

Other monetary assets (Note 3) ...... .. . ... ... . ... . .. . ........ . ... . 

Accounts receivable, net of allowances (Note 4) . . ... ... . .. . . . ...... ... . 

Inventories and related properties ...... ...... . . . ........ .. . . ... ..... . 

Loans receivable, net of allowances (Note 4) . . . . . . . . ... .. ... ... .. . . .. . 

Advances and prepayments . . . . . . .. . .... . ... .. ... . . ..... . . . .. . . .. . 

Property, plant, and equipment, net of accumulated depreciation .. . .. .. . . . 

Other assets . .. .. .. . ...... .. . . ...... .. .... ...... . . . ... .. . . . . . . . 

Total assets ... . . ......... . .. · ...... . ... .. . . ... . . .. . ..... .. .. . . . . 

Liabilities 

Accounts payable 

Interest payable . . . ... . . .. .. . . . . . . .. . ....... .... .. .. ... . .. . ... . . . 

Accrued payroll and benefits . . .. . . ..... .... . ... ... . . . . .. . . . . . . . .. . . 

Unearned revenue (Note 8) ... . .... ... ... . ......... . . . .. . . . . .... . . . 

Federal Debt held by the public (Note 9) .. .. . ....... .. .. .. .. . . .... ... . 

Pensions and actuarial liabilities. (Note 10) ................ . . .. . . . . . . . . 

Other liabilities .. . .. . . . . . . . .... . ... . .... . . . ... . .... . . ...... . ... . . 

Total liabilities ... . .. ................. . ......... . . . ....... · . .... . 

Accumulated position . . : . ........ . . . . . . .. . ..... . .. . .. . .... . . . . . 

The accompanying notes are an integral part of this statement. 

56.3 

126.2 

76.6 

224.1 

118.8 

12.9 

589.9 

151 .1 

1,355.9 

48.4 

45.1 

17.2 

36.0 

3,432.3 

1,526.2 

251 .9 

5,357.1 

-4,001 .2 

11 
12 

~\NFo'ti>, 

~o --~.,)-, 

,~ i 6 0 z 

it * 

consolidated financial statements 

United States Government 

Consolidated Statement of Operations 

for the Year Ended September 30, 1994 

(Unaudited) 

(In billions of dollars) 

Revenues 

Levied under the Government's sovereign power: 

Individual income taxes ........... . ...... . ........ . ..... . .... . .. . 

Corporate income taxes .. .. . . . . . .... .. ..... .. . . ....... .. .. . ... . . 

Social insurance taxes and contributions ... .... ...... . ... ... . .. . .. . . 

Excise taxes . . .. . . .. . . ..... . ...... . ... .. . . ... . ............. . . . 

Estate and gift taxes ............... .. .... . . . . .. . ....... ........ . 

Customs duties . .. . .... . .. . .... . ... . ..... . .. ......... ..... . . .. . 

Miscellaneous .... . ........ . .. . .... . ... . .... . .......... . .. .. .. . 

Earned through Government business-type operations: 

Sale of goods and services .. . ... . . . ... . .... ...... . . . . .......... . . 

Interest ... ..... ....... . . . . . .. .. .......... . ....... . .. . .. . . ... . 

Other . ......... . .... . ... .. . .. . . . . . ... .... ... . .. .. . . ......... . 

Total revenues .... .. ...... . .. . . . ............. . .... .. . . ... . . . . 

Expenses by agency 

Legislative branch .. . .... . .. . ... . ...... . ...... . ..... . .... .... ... . 

Judicial branch ........... .. .. . .. . .. .. . . ..... ... . . . . ... . . . . . .. . . 

Executive branch: 

Funds appropriated to the President 1 ................ . . . . .... . .... . 

Departments: 

Agriculture . ...... . ................ . ............ . ........... . 

Commerce .......... ... .. . ..... .............. .. . ... . . . ... . . . 

Defense (military) . . . .... . .. . . . . . .. .. . . . . .... . . .. . .... ...... . . . 

Defense (civil) ........ . .. . . .. ... ... ....... . .......... .. . ... .. . 

Education ....... . . ..... . .... ... ........ . . ..... . .. . ......... . 

Energy ......... . . . ... . . . ... . .. .... ... . . . .... . ... . ... . . . ... . 

Health and Human Services, except Social Security ........... .. .... . 

Health and Human Services, Social Security . . ..... . .. . . . . . .... .. . . . 

Housing and Urban Development ... . ... .. .. . .. .. .... . ..... . .... . 

Interior ........ . .. . .... .. . .. ... . ...... . . .. ...... . ... . ..... . . 

Justice . ....... .... ... ... .. . . . . . .. .. .. ... . . .. . . . ... .. . .. . . . . 

Labor . .. .... . ........ . ..... . . . ..... .. .... . ....... . .. . ... . . . 

State .. . .. . ..... . ......... . ... . .... . .. . ... . ... . ....... ..... . 

Transportation .... .. .... . ..... . .................. .. .. . ...... . 

Treasury: 

Interest on debt held by the public .... ... . . . . . . ............ .. . . . . 

Other . ............. . . . ..... . .. . .... . ..................... . 

Veterans Affairs . . .. ...... . . . ... .. . .. . .. .. . ....... . . . . .. . .... . 

Independent agencies 2 ........................................ . 

Total . . ...... .. ...... . . . ..... .. . . .... . ..... . .. ... .. . .. ... .. . 

Veterans Affairs adjustment for actuarial liability change 3 .. . •.. • . .... 

Total expenses .. . ... . .. ... ... . . . . . ....... . ...... . .. ... . .. . 

Expenses in excess of revenues ....... .. .. . ..... . . . . .... . . . ... . .. . . 

543.1 

140.4 

461 .5 

55.2 

15.2 

20.1 

22.0 

1,257.5 

82.1 

10.6 

35.9 

1,386.1 

2.5 

2.6 

cfs 

1.2 

73.5 

3.2 

280.9 

26.5 

29.0 

26.1 

300.8 

330.1 

29.0 

6.7 

6.9 

34.3 

6.8 

37.5 

207.7 

26.1 

21 .1 

134.1 

1,586.6 

-65.6 

1,521 .0 

-134.9 

The accompanying notes are an integral pan of this statement. 1 Includes Executive Office of the President. 2 Includes EPA, GSA, NASA, OPM, SBA, and other independent 

agencies. 

3 The net decrease in the actuarial present value of future liability 

of C&P benefits from 1993 to 1994 is mainly caused by the change 

in the discount rate. For more information, see VA's 1995 Accountability Repon. 
cfs notes to financial statements 

notes to financial statements 

1. Summary of si9nificant 

accounting policies 

Principles of consolidation 

The "Consolidated Financial Statements 

of the United States Government, Prototype 

1994" (CFS) reflect several changes Jesigned 

to streamline preparation and presentation 

methods. These changes were brought about 

through the increased use by Federal agencies 

of the U.S. Government Standard General 

Ledger (SGL). 

Although the means of submitting financial 

data to the Department of Treasury's Financial 

Management Service (FMS) have not 

changed, the format of the data has. Federal 

agencies will continue to submit their data to 

FMS electronically via the Government Online Accounting Link System (GOALS). However, agencies now submit their financial data 

in the form of a pre-closing adjusted trial balance under the new Federal Agencies' Centralized Trial Balance System (FACTS). This 

system replaces the traditional SF 220 series 

of reports under the former Federal Agencies' 

Financial Reports or FAFR system. 

Because the data for I 994 are the first to reflect these changes, the I 994 CFS is not presented in a comparative format with 1993 

data. Also, the agencies' reporting entities and 

levels of reporting have changed. Agencies 

now have the option of reporting data on a 

fund group and business line level to better reflect their activity and spending. This differs 

considerably from the previous appropriationbased reporting levels established by reporting 

requirements under I TFM 2-4100. FMS will 

resume report presentation in a comparative 

format with the 1995 CFS. 

The Consolidated Financial Statements report on the financial activity of the legislative, 

judicial, and executive branches of the Federal 

Government, and those Government corporations that are part of the Federal Government. 

The Federal Reserve System and the Government-sponsored enterprises are excluded. The 

legislative branch provides limited reports voluntarily. The judicial branch does not provide 

financial reports to Treasury. Thus, the financial information on the judicial branch presented in the CFS is an estimate based on the 

"Final Monthly Treasury Statement." 

All significant intragovernmental transactions were eliminated in consolidation. 

Basis of accounting 

The Secretary of the Treasury, the Director 

of the Office of Management and Budget 

(0MB), and the Comptroller General of the 

United States, principals of the Joint Financial 

Management Improvement Program (JFMIP), 

established the Federal Accounting Standards 

Advisory Board (FASAB) in October 1990. 

FASAB recommends accounting standards to 

the JFMIP principals for approval. Upon approval, they become effective on the date 

specified in the standards published by 0MB 

and GAO. 

In March 1991 , the JFMIP principals approved the FAS AB 's recommendations governing interim accounting standards used in 

preparing financial statements for audit. Until 

a sufficient set of comprehensive "generally 

accepted accounting principles" have been 

published by JFMIP principals, the revised 

guidance recommends a hierarchy of "other 

comprehensive basis of accounting" to be 

used for preparing Federal agency financial 

statements. The hierarchy is as follows: 

1. Individual standards agreed to and published by the JFMIP principals. 

2. Form and content requirements included 

in 0MB Bulletin 93-02, dated October 22, 

1992, and subsequent issuance, 0MB Bulletin 

94-01. 

3. Accounting standards contained in an 

agency accounting policy, procedures manuals 

and/or related guidance as of March 29, 1991, 

so long as they are prevalent practices. 

4. Accounting principles published by 

authoritative standard-setting bodies and other 

sources (1) in the absence of other guidance in 

the first three parts of this hierarchy, and (2) if 

the use of such accounting standards improves 

the meaningfulness of the financial statements. 

Principal financial statements 

The principal statements are unaudited and 

consist of the Statements of Financial Position 

and Operations, and use the accrual basis of 

accounting in their presentation. However, 

revenues levied under the Government's sovereign power are reported on the cash basis. The 

statements of Cash Flows, Budget Receipts 

and Outlays, and Reconciliation of Accrual 

Operating Results to the Budget will no 

longer be presented in order to streamline the 

CFS. 

13 
14 notes to financial statements cfs 

Fiscal year 

The fiscal year of the U.S. Government 

ends September 30. 

2.Cash 

The cash reported in the financial statements represents balances from tax collections, customs duties, other revenues, public 

debt receipts, and various other receipts maintained in accounts at the Federal Reserve 

banks and the U.S. Treasury tax and loan accounts. 

3. Other monetary assets 

Gold 

Gold is valued at market for fiscal 1994. 

The market value represents the price reported for gold on the London fixing, and is 

based on 261,806,237.617 fine troy ounces as 

of September 30, 1994 (as reported in Treasury's general ledger). The statutory price of 

gold is $42.2222 per troy ounce. 

International Monetary Fund special 

drawing rights 

The value of special drawing rights is 

based on a weighted average of exchange 

rates for the currencies of selected member 

countries. The value of a special drawing 

right was $1.467 as of September 30, 1994. 

For details see the table above right. 

4. Accounts and loans 

receivable 

Summary of accounts and loans 

receivable due from the public 

The Federal Government is the Nation's 

largest source of credit and underwriter of 

risk. The Debt 

Collection Act of 

Other monetary assets 

as of September 30, 1994 

(In billions of dollars) 

Gold (at market value of 

$394.85 per troy ounce) ..... 

U.S. reserve position in the 

International Monetary Fund .. 

Special drawing rights ... .... . 

Nonpurchased foreign 

currencies ..... .. . ....... . 

Other ........... .. ... . ... . 

Total other monetary assets .. 

103.4 

12.0 

10.0 

.3 

.5 

126.2 

these reports to improve the quality of its 

debt collection methods. 

In 1990, the Credit Reform Act was enacted to improve the Government's budgeting and management of credit programs. 

The primary focus of the Act is to provide 

an accurate measure of the long-term costs 

of both direct loans and loan guarantees, 

and to include these costs at the time of 

loan origination. Most direct loans obligated and loan guarantees committed after 

September 30, 1991 , are reported on present value basis. 

5. Inventories and 

related properties 

Inventories and related properties consist of several categories. Inventory held 

for sale is tangible personal property that is 

1982 (31 U.S.C. 

3719) requires 

agencies to prepare and transmit 

a report summarizing any outstanding receivables on 

their books. 

Accounts and loans receivable 

as of September 30, 1994 

Agencies are 

required to submit 

those reports to 

the 0MB and the 

Department of the 

Treasury. The Federal Government 

uses the data in 

(In billions of dollars) 

Gross receivables .....•.... . .. . . . ..... 

Less: Allowances for losses ... ... . .. ... . 

Less: Allowance for subsidy . ........... . 

Net receivables ............ .. ...... . 

Accounts 

receivable 

144.5 

67.9 

76.6 

Loans 

receivable 

181.4 

41 .8 

20.8 

118.8 
cfs notes to financial statements 

either (a) being held for sale, (b) in the 

process of production for sale, or (c) to 

be consumed in the production of goods 

for sale or in the provision of services 

for a fee. Operating materials and supplies are tangible personal property to be 

consumed in normal operation. Stockpiled materials are strategic and critical 

materials held due to statutory requirements or for use in national defense, conservation or national emergencies. Other includes forfeited property, foreclosed 

property, commodities and other. 

Agencies use a wide variety of methods 

to value inventories (e.g. first-in-first-out, 

last-in-first-out, latest acquisition cost, and 

weighted or moving averages). The Department of Defense uses the latest acquisition 

method to value their inventories. 

Inventories 

and related 

properties 

Department of Energy uses the 

lower of cost or market to value 

their inventories. For details see 

the table at left. 

6. Property, plant, 

and equipment 

Defense 

71.3% 

Property, plant, and equip-

_ Transportation 

0.9% 

ment includes land, buildings, 

structures and facilities, ships 

---._______ other 

4.8% 

Inventories and related 

properties as of 

September 30, 1994 

(In billions of dollars) 

Inventories held for sale . . ... . 

Operating supplies .......... . 

Stockpiled materials .. ..... . . 

Other ......... . . .. . .. . .. . . 

Total inventories .. ..... .. . . 

17.9 

92.1 

92.7 

21.4 

224.1 

and service craft, industrial equipment in plant, and constructionin-progress. It also includes 

automated data processing software, assets under capital lease, 

and other fixed assets that have 

been capitalized. 

Land purchased by the Federal Government is valued at historical cost. The land 

acquired through donation, exchange, bequest, forfeiture, or judicial process is estimated at amounts the Government would 

have paid if purchased at the date of acquisition. No value has been assigned to the 

Outer Continental Shelf and other offshore 

lands. More than 651 million acres of public domain land have been assigned a minimal value of $ 1 per acre, and are included 

in the total land amount. 

The accumulated depreciation reported 

by agencies in 1994 was $66.8 billion. 

Property, plant, and equipment as of September 30, 1994 

(In billions of dollars) 

Military equipment . ... . . . . . . .. .... . ... .. ... . . ... ........ . •....• . ... . . . .. 

Buildings, structures, facilities, and lease-hold improvements .. .. ... . ... .. . . .. .. . 

Other . . . . . . . . . . .. .. .. .. ... .. . . .. .. . .......... . ... . . . .. . .... . .... . . . . . 

Construction in process ....................•.......•................ . .... 

Equipment, other ... .. . . .. ....•........... . .. . .............. . ........... 

Land ... . ... . .... . . . .. .. .. . . .... ..... .. . .. . .. ..... .. .. . . . ... • . . . . . ... . 

Subtotal ...................... . . . . . . . . . . .. . .. . . . . . . . . . ... ..... . . .. . . . 

Less: Accumulated depreciation ............ . ....... . ................ . ... . 

Total property, plant, and equipment. ......... . . ... . . • . . ..•...... ... ..... 

478.6 

267.4 

157.8 

110.0 

102.5 

23.2 

1,139.5 

549.6 

589.9 

15 
16 notes to financial statements cfs 

Most agencies use the straight-line 

method. Treasury estimates the depreciation for those agencies that do not report, using the straight-line method 

applied to the total of reported depreciable assets. 

The useful lives for each classification of assets are as follows: 

• Buildings ............. ... 50 yrs. 

• Structures and facilities . .... 21 yrs. 

• Ships and service craft. .. . .. 13 yrs. 

• Industrial equipment in plant. 13 yrs. 

• All other assets. . . . . . . . . . . . 13 yrs. 

The largest ownership of Federal 

property, plant, and equipment, except 

for land, remains within the domain of 

Department of Defense, whose major 

equipment items and weapons systems 

are valued at acquisition cost. When the 

acquisition cost cannot be determined, 

the estimated fair market value of such 

equipment and the costs of obtaining 

the equipment in the form and place to 

be put into use are recorded. Real and 

personal property are also recorded at 

acquisition cost. 

7. Other assets 

Other assets includes receivables and 

other assets from banking assistance 

and failures, deferred retirement costs 

from Postal service, and investments 

held by the agencies and other miscellaneous assets. Other assets are summarized by agency in the table below. 

8. Unearned revenue 

Unearned revenue represents an obligation to provide goods or services for which 

payment has already been received. Examples of unearned revenue include unearned 

rent, unearned subscriptions, and advances 

from customers. Unearned revenue is summarized by agency in the table below. 

Unearned revenue as of 

September 30, 1994 

(In billions of dollars) 

Funds Appropriated to the President 

Department of the Interior . ...... . 

Housing and Urban Development . . 

U.S. Postal Service . .. . . . .. . ... . 

Other . . .. ... . . . ... . . . ... . . . . . . 

Total. . ...... . . . . . .. .... ... . . 

• Includes Executive Office of the President. 

*14.2 

3.5 

7.0 

2.8 

~ 

36.0 

9. Federal debt held by 

the public 

Total Federal debt held by the public 

amounted to $3,432.3 billion at the end of 

fiscal 1994. The three debt tables on the following pages reflect information on borrowing to finance Government operations. These 

tables support the Statement of Financial Position caption, "Federal debt held by the public," and are shown net of intragovernmental 

holdings and unamortized premium or discount. Intragovernmental holdings represent 

that portion of the total Federal debt held as 

investments by Federal entities, including 

major trust funds. 

Other assets as of September 30, 1994 

(In billions of dollars) 

Funds Appropriated to the President . .... .. .. .... . . . .. . .. .. . ...... .. . .. .. . 

Federal Deposit Insurance Corporation .... . ..... . .. .... .. .... . .. . .. ... . .. . 

Resolution Trust Corporation ........... .. .. . ..... . .. .. . . . . . .... .. . . .... . 

U.S. Postal Service . . ........................... . ........... . ........ . 

Other . . ....... . . . . . . .. .. . ..... . . . ... ... . . . . . ... . .. ... . .. . .......... . 

Total . . .. . . . ... . . . . . ... .. .... . . . . .. .. .. . . .. ... .... . . .. . ... . .. .. ... . 

• Includes Executive Office of the President. 

* 70.6 

9.9 

28.5 

27.2 

14.9 

151 .1 
cfs notes to financial statements 

Federal debt held by the public as of September 30, 1994 

Average interest 

rate (percent) 

Total debt (in 

billions of 

dollars) 

Public debt: 

Marketable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.507 

Nonmarketable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.667 

Non-interest bearing debt ..................... . . . ... . . .. . . . . ..... . 

Total public debt outstanding .. . ..... .... . . ... ... .. . ... .......... . 

Plus: Premium on public debt securities ....... .. . . . .. .. . . .. . . ... . . . 

Less: Discount on public debt securities ...... . . . ............ .. .... . 

Total public debt securities ... . ... . ...... • ... ...... . . .. . .. . .... . Agency debt: 

Tennessee Valley Authority . .. . . . ... . .......... . .. .. ....... . .... . . 

Farm Credit System Financial Assistance Corporation . . . ....... . ...... . 

Housing and Urban Develo!Jment . ..... . ... . . . .. . ...... .. . . . ... . . . . Federar Deposit Insurance Corporation: 

FSLIC resolution fund . ....... .. . .... ... . . .. . .... ........... • .. . 

National Archives and Records Administration . .. ... . . .. . . .. . . .... ... . 

Architect of the Capitol ... . .. . .......... . ... . .. . ...... . . .. ... . ... . 

Total agency securities . . . .... . . . ....... . . . . ... . . ............ . . . 

Total Federal securities .. . . . . . ...... . ... .. . . .. . . ....... . . .... . . 

Less: Federal securities held as investments by 

Government accounts . .. . . .. . .......... ..... ..... . . . .... . .. . 

Total Federal debt held by the public . .. .. .. ...... .. .. . .... . .. . . . 

Summary of Federal Debt Outstanding: Part I 

Total Debt Outstanding as of September 30, 1994 

(In billions of dollars) 

Marketable 

Bills ......... . ............. . ........... . ..... ... . . 

Notes ........ .......... . . ........... .. ...... .. ... . Bonds ....... . . . ...... .... ... .. . .. . ... . . . .. . . . ... . 

Federal Financing Bank ......... .. ... . . .... ...... .. . . 

Total marketable . .. .. ................... ... ... . ... . 

Nonmarketable 

Foreign government series . . ... . . ........ .... . . ... ... . 

Government account series . . . . .. ............ ........ . 

State and local government series . ... . .... . . . ......... . 

U.S. savings bonds . ... ........ . . . . . ...... ... ...... . . 

Other ... . ........... . ... . . . . . ................. ... . 

Total nonmarketable ... . ... . ........ . .. . .. . . ....... . 

Average 

interest rate 

(percent) 

4.735 

6.388 

9.229 

8.917 

6.507 

7.363 

7.895 

7.011 

6.597 

7.927 

7.667 

Total 6.897 _ interest-bearing debt 2 ......... .. . .. ... . • . . .. .. ... 

Non-interest-bearing debt . . ........ ........ .. . .. .. .... . ... ... .. . Total public debt outstanding . . ..... .. ........ ................. .. . 

Plus: Premium on public debt securities .. .. ... ... ...... . .. . ........ . . 

Less: Discount on public debt securities . . ....... . .. . . . ... . . ........ . . 

Total public debt (Treasury securities) . . . . . . ....................... . 

Agency securities . .. . .. . ... . . . . . ....... . .. . .. ... . . .. . .. . ....... . 

Total Federal securities . ...... . .... . ... .. ..................... .. . 

Less: Federal securities held as investments by Government accounts .. . . . . 

Total Federal debt held by the public ... . ... . . . .. . ............... . . 

Types of marketable securities 

3,091 .6 

1,598.0 

3.2 

4,692.8 

1.3 

78.6 

4,615.5 

26.1 

1.3 

.1 

.2 

.3 

~ 

.2 

4,643.7 

1,211.4 

3,432.3 

Total debt 

697.3 

1,867.5 

1 511 .8 

15.0 

3,091.6 

42.0 

1,211 .7 

137.4 

176.4 

30.5 

1,598.0 

4,689.6 

3.2 

4,692.8 

1.3 

78.6 

4,615.5 

28.2 

4,643.7 

1,211.4 

3,432.3 

1 These marketable securities were issued to the Civil Service 

Retirement Fund and are not currently traded in the market. 

2 Includes matured debt of $2.1 billion and other various non-interest-bearing debt of $1 .1 billion. 

Bills- Short-term obligations issued with a term of 1 year or less. 

Notes-Medium-term obligations issued with a term of at least 1 year, 

but not more than 10 years. 

Bonds-Long-term obligations of more than 10 years. 

17 
18 notes to financial statements 

Summary of Federal Debt Outstanding: Part II 

lntragovernmental Holdings-Federal Securities 

Held as Investments by Government Accounts 

as of September 30, 1994 

(In billions of dollars) 

Federal 

lntragovernmental holdings Funds 1 

Legislative branch ... . .. .. .. . . . . ... .... . ..... . .5 

Judicial branch . . .. .. ... . ... . ....... ... .... . . . 

Executive branch: 

Funds appropriated to the President ...... . . .... . 1.9 

Departments: 

Agriculture ... . . .. ... .. . ........ . ...... . .. . 

Defense ...... . .. . ...... ..... ............ . 

Energy .. . ..... .. .......... . ....... . .... . . 4.5 

Health and Human Services ....... . ... . .. .. . . 

Housing and Urban Development ...... . ...... . 9.7 

Interior ........ . ........ .... . ......... .. . . 2.7 

Justice . . .. . .. ... .... . .. .. ............ . . . . .1 

Labor ..... . . . .. . .. .. . . .................. . 5.3 

State ........ . ... . .... . ... . .... . ..... . .. . 

Transportation .. ... ... . . ... . .. . ..... .. . ... . 1.0 

Treasury .. . . ..... . ........ . . ........ . . . . . 7.5 

Veterans Affairs . .......... . .............. . . .6 

Independent agencies: 

Environmental Protection Agency .............. . 

Export-Import Bank . .. .. . . . . ................ . .1 

Farm Credit System Insurance Corporation · ...... . 1.0 

Federal Deposit Insurance Corporation .... ..... . . 18.1 

Federal Emergency Management Agency ... . .. . . .2 

National Credit Union Administration ....... .. ... . 3.0 

Office of Personnel Management . . ... .. . ..... . . 

Railroad Retirement Board ... . .......... . . . .. . 

Tennessee Valley Authority .. . ..... .. . .. ... ... . 4.0 

U.S. Postal Service ......................... . 1.3 

Various scholarship funds .... .. .............. . 

Subtotal . . .... . . . . . .. . . ... .. . . . . . ........ . 61 .5 

Less: Discount on Federal securities held as 

investments by Government accounts ...... ... . 1.5 

Total . . ......... . . . ..... . .. . ..... ...... . 60.0 

Trust 

Funds 2 

.2 

.3 

3 107.6 

4 570.6 

.2 

5 39.8 

7.2 

6 31 .6 

.3 

13.5 

6.2 

7 361.4 

12.2 

.3 

1,151.4 

1,151.4 

Total 

.5 

.2 

1.9 

.3 

107.6 

4.5 

570.6 

9.7 

2.9 

.1 

45.1 

7.2 

32.6 

7.8 

14.1 

cfs 

6.2 

.1 

1.0 

18.1 

.2 

3.0 

361.4 

12.2 

4.0 

1.3 

.3 

1,212.9 

1.5 

1,211.4 

1 Federal funds are monies held by Government accounts that are 

not trust funds. 

4 Includes Social Security trust funds of $419.5 billion and medicare 

trust funds of $150.2 billion. 

2 Trust funds are monies held by the Government in accounts 

established by law or by trust agreement for specific purposes and 

designated by law as being trust funds. 

3 Includes military retirement fund of $105.4 billion. 

5 Unemployment Trust Fund of $39.8 billion. 

6 Includes Highway Trust Fund of $17.7 billion and Airport and Airway 

Trust Fund of $12.2 billion. 

7 Includes civil service retirement and disability fund of $338.9 billion 

and employee life insurance fund of $14.9 billion. 
cfs notes to financial statements 

10. Pensions and other 

actuarial liabilities 

The Federal Government administers 

more that 40 pension plans. The largest are 

administered by the Office of Personnel 

Management (OPM) for civilian employees 

and by Department of Defense (DOD) for 

military personnel. The majority of the pension plans are defined benefit plans. 

The accounting for accrued pension, retirement, disability plans, and annuities is 

subject to several different assumptions, definitions, and methods of calculation. Each of 

the major plans is summarized in the table at 

the bottom of the page, and the actuarial liability is included on the Statement of Financial Position. 

Civilian employees and military 

personnel 

Pension expense for the various Federal 

pension plans is calculated for budgetary 

purposes by a variety of actuarial funding 

methods. For financial reporting purposes, 

Federal pension plans report their accumulated benefit obligation (ABO) pursuant to 

directions under the provisions of Public 

Law Number 95-595. The ABO is calculated 

with the "unit credit" actuarial cost method. 

The ABO is recognized as a liability in the 

Consolidated Statement of Financial Position. An expense is recognized equal to the 

annual change in the ABO. Most Federal 

pension plans are funded with obligations issued by the Treasury pursuant to the actuarial method and funding requirements 

specified by the governing law. These plan 

assets (Treasury bonds or other debt), being 

obligations of the United States, were eliminated from the consolidated statements. 

Civilian 

The Federal Government has both defined benefit and defined contribution pension plans. 

• Defined benefit 

The principal plan is administered by 

OPM and covers approximately 90 percent 

of all Federal civilian employees. It includes 

two components of defined benefits: the 

Civil Service Retirement System (CSRS) 

and the Federal Employee's Retirement System (FERS). The basic benefit components 

of the CSRS and the FERS are financed and 

operated through the Civil Service Retirement and Disability Fund (CSRDF), and all 

disbursements for both are made from the 

CSRDF. Most employees covered by CSRS 

contribute 7 percent of their basic pay, an 

amount fixed by statute. The FERS employees contribution is .8 percent in fiscal year 

1995. The valuation of the Retirement Program has been prepared by OPM in accordance with Financial Accounting Standard 

(FAS) 35. 

• Defined contribution 

The Federal Retirement Thrift Investment Board is a Federal agency that operates 

the Thrift Savings Plan. The fund's assets 

are owned by the Federal employees and retirees, who have individual accounts. For 

this reason, the fund is excluded from the 

CFS and the fund 's holdings of Federal debt 

are considered part of the debt held by the 

Pensions and other actuarial liabilities 

as of September 30, 1994 1 

(In billions of dollars) 

Civilian retirement-OPM . . . . .. . .. . ........... ... . . 

Military retirement-Defense ........ .. .... . ... . ... . 

Veterans' compensation and benefits .... . . ........ . 

Compensation programs .. . ......... . ........... . 

Other pension programs . .. .. . .. ... . ....•.. . .•... 

Other benefits .. . ................. . . . ..•.. . . . ... 

Total. . . .............. . .. . ............. • • .• •• 

Actuarial 

liabilities 

2 694.8 

529.1 

213.8 

20.6 

27.9 

40.0 

1,526.2 

Does not include actuarial liability for future costs of post-retirement health benefits. 

Unfunded 

Plan assets liabilities 

344.3 350.5 

131.8 397.3 

213.8 

20.6 

14.9 13.0 

32.0 8.0 

523.0 1,003.2 

2 Information needed to compute the plan's accumulated benefit obligation as of the end of the year was not available when the OPM's 

financial statements for fiscal 1994 were released. Under FAS 35, the presentation of the accumulated benefit obligation can be either 

beginning or end of year. OPM's accumulated benefit obligation is presented as of the beginning of the year. 

Note.--For Social Security, see note 14. 

19 

40~ 11~ I

i 0 [.I., z 

i< * 
20 notes to financial statements cfs 

public rather than debt held by the Government. 

The Thrift Savings Plan is a defined contribution plan for eligible employees covered under the Civil Service Retirement 

System (CSRS) and the Federal Employees' 

Retirement System (FERS). 

FERS employees may contribute up to 

10 percent of base pay to the plan, which is 

matched by the Government up to 5 percent. 

CSRS employees may contribute up to 5 percent of base pay with no Government match. 

An individual's total annual contribution 

could not exceed $9,240 in 1994. 

The plan was started in April 1987 and as 

of September 30, 1994, the total invested 

was $25.0 billion. Investments consist primarily of U.S. Government nonmarketable 

certificates of $17 .6 billion, which are included in "Federal debt held by public" in 

the Statement of Financial Position. In addition, $5.8 billion and $ 1.6 billion have been 

invested in the Common Stock Index and 

the Fixed Income Funds, respectively. 

Military 

The Department of Defense Military Retirement Fund was authorized in Public Law 

Number 98-94 for the accumulation of funds 

in order to finance liabilities of the Department of Defense under military retirement 

and survivor benefit programs. The fund provides retirement benefits for military personnel and their survivors. 

Veterans' compensation and 

pension benefits 

Veterans or their dependents receive compensation benefits if the veteran was disabled or died from military 

service-connected causes. War veterans or 

their dependents receive pension benefits, 

based on annual eligibility review, if the veterans were disabled or died from nonserviceconnected causes. Certain pension benefits 

are subject to specific income limitations. 

VA has a liability for benefits expected to 

be paid in future fiscal years to veterans and, 

if applicable, their survivors who have met 

or are expected to meet defined eligibility 

criteria. The liability of the Compensation 

and Pension Programs (C&P) is not currently funded, nor is there any intent to do 

so. Rather, payments for benefits that become due in a particular year are financed 

from that year's appropriation, in effect, on a 

pay-as-you-go basis. Payments of the liability as it becomes due rely on Congressional 

authorization of future tax revenues or other 

methods, such as public borrowing, for their 

financing. 

The net decrease in the actuarial present 

value of the liability for C&P benefits from 

1993 to 1994 is mainly caused by the change 

in the discount rate. 

The actuarial present value of the liability 

of C&P benefits as determined by VA on September 30, 1994 is shown in the table below. 

Veterans' compensation 

and benefits as of 

September 30, 1994 

(In billions of dollars) 

Compensation: 

Veterans ..... . .... ............. 137.4 

Survivors . . . . . . . . . . . . . . . . . . . . . . . 45.2 

Total compensation . ... . .. .. . .. .. . 182.6 

Pension and burial benefits: 

Veterans . . . . . . . . . . . . . . . . . . . . . . . 19.8 

Survivors . . . . . . . . . . . . . . . . . . . . . . . 8.8 

Burial ....... . ................ . . 2.6 

Total pension and burial. . . . . . . . . . 31 .2 

Total. .............. . . ... .. . . 213.8 

Compensation programs 

This amount represents the estimated future costs for injuries incurred to date for approved Federal Employees' Compensation 

Act cases and Black Lung cases. 

Other pension programs 

Other annual pension reports received 

from plans covered by Public Law Number 

95-595 are reported in the same manner as 

those for military personnel and civilian employees (described earlier). 

Other benefits 

Other benefits consist of various items 

for which the Government is responsible, 

such as life insurance benefits for veterans 

and Federal employees. VA insurance includes the following programs: United 

States Government Life Insurance; National 

Service Life Insurance; Veterans Insurance 

and Indemnities; Veterans Special Life Insurance; Veterans Reopened Insurance; Service 

Disabled Veterans Insurance; and Servicemen's Group Life Insurance. 

The Federal insurance program is the 

Federal Employees Government Life Insurance. These other benefits do not include the 

actuarial liability for the future costs of postretirement health benefits for retirees. 
cfs notes to financial statements 

Post employment benefits 

other than pensions 

The Federal Government operates a pay-asyou-go system for health benefits for both civilian and military retirees. The actuarial 

estimates on retirees' health care costs are summarized below. 

Retiree health care costs as 

of September 30, 1994: 

Actuarial estimates 

(unfunded) 

(In billions of dollars) 

Military health programs ....... . 

Federal Employees Health 

Benefits Program . . ....... .. . 

Total unfunded retiree health care costs ................ . 

203.7 

103.5 

307.2 

Civilian employees retiree health 

benefits 

Generally, employees are eligible for post-retirement health benefits if they participated in 

the Program for the five years immediately preceding their retirement. As a condition of participation, retirees must make contributions 

toward their premiums, which, for the vast majority, are deducted directly from their monthly 

annuity payments. Contributions for future postretirement health benefit premiums are required 

neither of active employees nor their employers. 

In 1994 the program was preparing to recognize its future cost of post-retirement health 

benefits in order to comply with the Financial 

Accounting Standards Board's Statement of Financial Accounting Standards (SFAS) No. 106. 

During preparation, it was learned that FASAB 

would propose a methodology for the calculation and reporting of a post-retirement obligation differing from that of SFAS 106. 

The FASAB approach is contained in exposure draft (ED), "Accounting for Liabilities of 

the Federal Government," issued on November 

4, 1994. Like SFAS No. 106, the FASAB standard will require the use of the accrual method of 

accounting to recognize the future cost of postretirement health benefits over the active years 

of employee service. The Program will recognize an initial post-retirement obligation (PRO), 

which is the future cost of post-retirement benefits for future retirees relating to service rendered up to the date of adoption of the FASAB 

standard. 

Assuming it has been issued, the Program 

will adopt the FASAB standard for fiscal year 

1995. In computing the Program's PRO, an actuary will apply actuarial assumptions to historical health benefit cost information in order to estimate the future cost of 

post-retirement benefits for current and future retirees. This estimate will be adjusted 

for the time value of money (through discounts fo r interest) and the probability of 

having to pay (by means of decrements, 

such as those for death and withdrawal). 

For insight into the Program's initial or 

(transition) PRO, it has been calculated in 

accordance with the methodology prescribed in the ED to be $103.5 billion on October 1, 1993. The Program's PRO expense 

in 1993 would have been $11.6 billion, 

rather than the $3.8 billion recognized as 

contributions expense (deductions from plan 

assets) under current accounting practice. 

Employing agencies would have been required by the standard to recognize a 1993 

post retirement health benefit expense of 

$1,839 per enrolled employee. 

In these calculations, an annual rate of increase in health benefit costs and a discount 

rate of 7 percent were assumed. Demographic assumptions are based on the actual 

experience of the Retirement Program, with 

adjustments based on recent Health Benefit 

Program trends and experience. For more details, see OPM's financial statements. 

Military retiree health plans 

Military retirees and their dependents are 

entitled to health care in military medical facilities if the fac ility can provide the needed 

care. Until they reach age 65, military retirees and their dependents also are entitled to 

health care financed by the Civilian Health 

and Medical Programs of the Uniformed 

Services (CHAMPUS). No premium is 

charged for CHAMPUS- financed care, but 

there are deductible and copayment requirements. 

After they reach 65 years of age, military 

retirees are entitled to medicare. The DOD 

costs for retiree health care include costs of 

buildings, equipment, education and training, staffing, operations, and maintenance of 

military medical treatment facilities. They 

also consist of claims paid by CHAMPUS 

and the administration of that program. 

Costs are fu nded annually by direct appropriations in the year services are rendered (or, for CHAMPUS, billed). The cost 

of the 1994 CHAMPUS program was $3.6 

billion, which includes both the benefit cost 

and the program administration cost. The 

funded cost of CHAMPUS was $3.4 billion. 

The estimate of the actuarial liability for 

military health programs for fiscal 1996 is 

$203.7 billion. 

21 
22 notes to financial statements 

11. Other liabilities Accumulated position Other reported liabilities are summarized by agency in the table at the bottom 

of the page. Included in other liabilities are 

liabilities arising from loan guarantees, 

capital leases, and contingencies. It also includes checks outstanding, the li abilities incurred from bank resolution and litigation 

losses, other accrued liabilities and other 

miscellaneous liabilities. 

as of September 30, 1994 

(In billions of dollars) 

Accumulated position at 

beginning of period .......... . -3,876.6 

Current period results . -134.9 

Change in market value of gold . . . 10.3 

Accumulated position at end 

of period .......... . ..... . . . -4,001 .2 

cfs 

12. Accumulated position 

The accumulated position as presented in 

the table above right represents the excess of 

liabilities over assets. It does not, however, 

reflect the range of Government resources, 

such as the sovereign power to tax , beyond 

the conventional assets. 

space rental. The current portions of lease 

costs are included in accounts payable. The 

long term portion of capital leases is reported 

as "other liabilities." Data fo r intragovemmental leasing transactions were not available at 

the time of publication. 

13.Leases 

Federal agencies were first required to 

provide financial information about lease 

commitments in 1986. Agencies are attempting to accumul ate the lease information required. The future aggregate minimum rental 

commitments for noncancel able capital and 

operating leases as of September 30, 1994, 

are detail ed in the chart at right. 

The majority of these lease commitments 

relate to buildings, equipment, and office 

Leases for fiscal 1995 

and beyond 

Operating 

(In billions of dollars) leases 

1995 ........ .. . 2.1 

1996 .... . . . .. . ... . . 1.8 

1997 . . . .. . . .... .. . . 1.5 

1998 .............. . 1.1 

Thereafter .......... . 5.8 

Total. ............ . 12.3 

Other liabilities as of September 30, 1994 

(In billions of dollars) 

Funds appropriated to the President ........ ... . ................... . ......... . 

Departments: 

Agriculture .. .. . .... .. . ..... . ...... .. .. . .... . ..................... . ... . . 

Defense . ... . .. .. . .. ..... . ...... . .... • . ....... ... .. . .............. . .... 

Education ......... . ......... .. . . . ... . . .. ..... . ... . .... .. .... . .. ... . . . . 

Energy ........................ .. ............ . .. . .... . ...... .. ..... . 

Health and Human Services ................. . ...................... . .. . .. . 

Housing and Urban Development. . . . . . ..... . . . ... ... . . .. . . . . .. . . .. . 

Labor . ........ . . .. ......... . . . .... . ..•....•..•... . . . . . . .. ..... 

Treasury .......... . .. . .. .. . . . .. .. . .. . .. .. ..... .. .... .. .... . .. • • • • • • • • • 

Veterans Affairs . ...... . .. ...... . ... .. .. . . . ...... . . .. . . ...... . ... . ... . .. . 

Other . . ........ . .. .. . . . ....... . . . . .... . . ....... ... . . .. ..... . .. . . . . . 

Total ..... . ......... . 

Includes Executive Office of the President. 

Capital 

leases 

.1 

.1 

.1 

.1 

.8 

1.2 

1 8.7 

10.9 

5.3 

15.2 2 58.9 3 58.8 

17.1 4 27.9 5 22.6 

6.1 

20.4 

251 .9 

2 Includes accrued liability for nuclear complex clean-up for Department of Oefense and accrued liability for decommissioning and 

decontamination of gaseous diffusion plant. 

3 Includes accrued benefits entitlements of $31 .1 billion from Social Security Administration and $25 billion of medicare services for which 

payments had not been drawn by the Health Insurance or Supplementary Medical Insurance trust funds. 

4 Includes unemployment benefits payable of $21 .2 billion. 

5 Includes special drawing rights certificates and allocations. 
cfs 

14. Social Security and 

Medicare 

A liability of $30.2 billion for social se-

curity is recognized in "other liabilities" 

for any unpaid amounts due as of the reporting date. No liability is recognized for 

future payment not yet due. For purposes 

of disclosure however, the actuarial surplus or deficit is determined annually. As 

of September 30, 1994, the actuarial deficit was $8,390.3 billion on a "closed 

group" basis. This amount represents the 

present value of the projected excess of 

future benefit payments to those presently 

participating in the Social Security program over taxes and other contributions 

still to be made by them and by their employers on their behalf. 

The Congress and the trustees of the 

funds prepare actuarial estimates based on 

an "open group" basis. This is a different 

financing method they regard as more appropriate for social insurance programs, 

namely, that future workers will be covered by the program as they enter the labor force . 

The present values of all contributions 

and expenditures are computed on the basis of the economic and demographic assumptions described as "Alternative II" in 

the "1995 Annual Report of the Board of 

Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance 

Trust Funds." Alternative II is the "intermediate" set of assumptions, and represent the Trustees' "best estimates" of 

future economic and demographic conditions. In determining present values, total 

contributions and expenditures for the 

trust funds are estimated for a period of 

75 years into the future. 

The following actuarial amounts prepared by the Social Security Administration are calculated on the basis of the 

preceding assumptions. 

Actuarial amounts as of 

September 30, 1994 

(In billions of dollars) 

Actuarial expenditures. . . 21,747.3 

Actuarial contributions . . 18,909.2 

Actuarial surplus/deficit(-) . . . -2,838.1 

notes to financial statements 

Medicare has total actuarial 

expenditures of $3,758.8 billion for the 

Federal Hospital Insurance Trust Fund 

(Part A), which is the present value of 

outlays projected between October 1, 

1994, and September 30, 2019. This 

amount includes the present value of 

claims incurred to October 1, 1994, but 

unpaid as of that date and any 

administrative expenses related to those 

claims incurred by unpaid outlays. 

The $4.4 billion in Federal 

Supplementary Medical Insurance Trust 

Fund (Part B) liabilities represent the 

amount of unpaid benefits as of October 1, 

1994, and the related administrative 

expenses. 

The Secretary of the Department of 

Health and Human Services annually 

determines the amount to be paid by each 

Supplementary Medical Insurance enrollee 

and by the Department of the Treasury, 

under the authority of section 1839 of the 

Social Security Act. 

15. Commitments and 

contingencies 

Commitments are long-term contracts 

entered into by the Federal Government, 

such as leases and undelivered orders, 

which represent obligations. 

Contingencies involve uncertainty as to 

a possible loss to the Federal Government 

that will be resolved when one or more 

future events occur. Contingencies of the 

Federal Government include loan and 

credit guarantees, insurance, and 

unadjudicated claims. 

Except for liabilities arising from the 

leases and loan guarantees, the contingent 

liability is recognized when the amount 

can be reasonably estimated and the future 

event is probable. 0MB Bulletin 94-01, 

"Form and Content of Agency Financial 

Statements" establishes guidelines for the 

reporting of lease liabilities and liabilities 

for loan guarantees. The contingent 

liability of $28.9 billion, capital lease 

liability of $.8 billion, and Joan guarantee 

liability of $21.4 billion reported by 

23 
24 notes to financial statements cfs 

Federal agencies on their financial 

statements appear in the U.S. Government 

Statement of Financial Position under 

"other liabilities." 

The table on the following pages shows 

the face value of commitments and 

contingencies, and includes contingencies, 

capital lease, and loan guarantees. The 

amounts reported in the commitments and 

contingencies table are presented without 

regard to the probability of occurrence and 

without deduction for existing and 

contingent assets that might be available to 

offset potential losses. 

"Long-term leases" includes both 

operating and capital leases. "Government 

loan and credit guarantees" includes 

guarantees in force as well as contracts to 

guarantee. "Insurance" includes insurance 

in force, contracts to insure, and indemnity 

agreements. 

In 1993, the Congress approved the 

Resolution Trust Corporation Completion 

Act, which was signed into law by the 

President on December 17. The 

Completion Act provided for the release of 

up to $18.3 billion of previously 

appropriated funds that had lapsed, 

bringing the total funds appropriated for 

the resolution of failed savings and loans 

to $105 billion. 

It is too early to tell just how much of 

these funds the RTC will need to cover its 

losses: the ultimate amount will depend on 

how much is recovered from the 

remaining assets of RTC receiverships and 

the settlements of various claims. 

Nonetheless, we currently expect that the 

RTC will not need at least $10 billion of 

the funds released by the Completion Act. 

In 1990, the estimated range for the 

total cost of protecting deposits in 

insolvent thrift institutions was $89 billion 

to $132 billion in 1980 present value 

terms. That range was translated into 

nominal dollar terms of $110 billion to 

$160 billion. In July 1992, the cost was 

adjusted upward toward the middle of the 

range, or about $130 billion. This would 

put the final cost below the estimated 

nominal dollar range provided in 1990. 

While current estimates are reasonable, 

there still are too many unknown factors to 

provide a single estimate of the ultimate 

cost. 

The Department of Energy is 

responsible for addressing the legacy of 

environmental contamination caused by 

the development and testing of nuclear 

weapons during World War II and the Cold 

War. Due to the high priority of weapons 

production, the treatment and storage of 

radioactive and chemical waste was 

handled in a way that eventually led to 

contamination of soils, surface water, and 

ground water in and around the 

Department's facilities. 

The Department has recorded an 

unfunded liability, as of September 

30, 1994, of $50 billion for environmental 

cleanup. This estimate is limited to 

liabilities incurred for waste cleanup, 

decontamination, and decommissioning 

for which payment will occur during 

future fiscal years and for which an 

agreement has been signed with a State, 

local municipality, or other Federal agency 

for purposes of conducting waste cleanup 

activities. The Department has completed 

the Baseline Environmental Management 

report showing life-cycle environment cost 

estimates ranging from $200 to $350 

billion in constant 1995 dollars, with a 

mid-range estimate of $230 billion 

The Federal Government, in 1994, 

continued to be the Nation's largest source 

of credit and underwriter of risk. Large 

portions of all non-Federal credit 

outstanding have been assisted by Federal 

credit programs, Government-sponsored 

enterprises, or deposit insurance. In 

particular, most credit for housing, 

agriculture, and education is federally 

guaranteed. 

For more information on commitments 

and contingencies, refer to the tables on 

the following pages. 
cfs notes to financial statements 

Commitments and Contingencies 

of the United States Government 

for the Year Ended September 30, 1994 

(In billions of dollars) 

Commitments 

Long-term leases: 

Commerce . . . . .... .. .. .. . . .... . .. . . . .. . . . .... . . .. .. .... . . .... .. . . .5 

Energy . .. . ... .. .. . . . .. . ... ...... . . . .. . . . . . . . . ... .... . . .. . ... .... .3 

General Services Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 

Tennessee Valley Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 

Treasury.. . .. . . .. . . . . . . .. .. . ... .. . . .. .. . . . ................ .. .. . .. .4 

U.S. Postal Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 

Other . . . .. . . . . . . . ... . ......... ... . .. . .. . . . .... . . . . .. . .. .. . . . .. . . .6 

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 

Undelivered orders, public: 

Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.6 

Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.3 

Health and Human Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.5 

Housing and Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189.8 

Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.4 

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385.0 

Total commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398.6 

25 
26 notes to financial statements 

Commitments and Contingencies, continued 

(In billions of dollars) 

Face value of contingencies 

Insurance: 

FDIC bank insurance fund ...... . .. . . . . . .. . . . . ... .. .. .. . .. .. .... .. . . 

FDIC Savings Association Insurance Fund .. . ... ... . .. . . . . . . .. ..... . .. . 

Federal Emergency Management Agency ... .............. . . .. .. .. . . . . 

National Credit Union Administration .. .. .... .. ..... . . .. . .. . .. . . .. ... . . 

Pension Benefit Guaranty Corp .. ..... .. .. .... . .. .. .. .......... .. .. . . 

Transportation .. . . . ............ . . . . . .. .. .. . . . ..... . . .. . . . .. . . .. . . 

Veterans Affairs .. .. . . . ... . . . .. . ........... . . . . . .. ..... . ... . .. .. . . 

Other . . . ... . .. .. . ...... . ... .. ....... .... . .. . ..... . . .. ... . .. .. . . 

Subtotal ... . ................ . . . . ... . ... . . . .. .. ... . .. . .... . .. .. . 

Government loan and credit guarantees: 

Agriculture ...... .. ............ . . .. ... . . . . . . . ..... .. .. . ... . .. . . . . 

Education .. ..... . .. . . . .. .. .......... . . ..... . .... . .. .. .. ... .. . . . . 

Export-Import Bank .. . .. .. . .. . . . ... . . . ... . ... . .. .. ...... . ..... ... . 

Housing and Urban Development .. . ..... .... ... . ... . . . .. .... . ... . .. . 

Small Business Administration .. . . .. .... .... . . .. . . . ... . .. . . .. .... . . . 

Veterans Affairs . . .. . ... .. . . . .. .. . . ... ... . .. . ..... ... .. ..... ... .. . 

Other ............... . .. . . . ... . . .. . . . . ... ... ... ....... . ..... . . . . 

Subtotal . . . . . .. ... . .. .. . .......... . .. . . . . . .. ... .. . .. . . .. . .... . . 

Unadjudicated claims: 

1,887.6 

691 .1 

267.1 

255.5 

950.0 

578.8 

523.2 

43.2 

5,196.5 

15.6 

77.2 

29.2 

408.2 

24.4 

63.1 

21 .0 

638.7 

cfs 

Health and Human Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.9 

Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.5 

Other contingencies: 

Defense . .. ... ... . .. . . .... . ... . .. . .. .. . ... . . ... . .... . ..... . .... . 

Energy . . .... . .. . . .... . .... . .... .. .. . .. .. . ... . .. . .. . .. .... . . . . . . 

Housing and Urban Development .. . . . ........... . . ... .. .. . . . . . . . .. . . 

Multilateral development banks ... . . ....... .... . . . .. .. . . ... . ..... . .. . 

Other .. .......... . .... . ..... .... . . . . . .. . . . ... . . ... . .. ....... .. . 

Subtotal ........ . . . ... . ..... .. .. . .. .. .. . . . . . . .. . . . . . . .. . .. .. . . . 

Total contingencies ... .. . .. .. ... . .... . . .... . ... . ....... . . .. .... . 

1 Environmental compliance was not reported in fiscal 1993. 

2 The amount increased because the fiscal 1994 estimate of environmental clean-up is projected further into the future. 

1 24.0 

2 180.0 

19.4 

6.5 

6.8 

236.7 

6,125.4 
cfs independent accountants' report 

from independent accountants ... 

COMMENTS OF COOPERS & LYBRAND L.L.P. 

Financial Information Management Directorate, 

Financial Management Service of the U.S. Department of the Treasury: 

We have completed our work related to Treasury's process for preparing the 1994 Prototype Consolidated Financial Statements (CFS) of the United States (U.S.) Government. At 

your request, we have read the sections of the Treasury Financial Manual and related Bulletins that govern preparation of the CFS and obtained an understanding, through inquiries 

of personnel, observation of procedures and_ inspection of documents, of Treasury's: (i) 

process for identifying the entities to be included in the CFS, (ii) procedures for accumulating and analyzing information submitted by Federal entities, (iii) efforts to compare submitted information with other Treasury and Office of Management and Budget (0MB) 

data and General Accounting Office (GAO) reports, (iv) bases for adjustments to the information submitted by Federal entities, and (v) procedures to conform the CFS to current 

Federal accounting standards. We also read Treasury's preliminary action plan for preparing the 1997 Audited Consolidated Financial Statements of the U. S. Government required 

by the Government Management Reform Act (GMRA) of 1994. 

This letter summarizes our comments and recommendations. Our work did not constitute an audit, review, or compilation of either Treasury's process for preparing the CFS or 

the CFS itself; accordingly, we are unable to, and do not, express an opinion or any other 

assurance on the process or the CFS. 

Existing deficiencies in the preparation process, as described below, are likely to result 

in material misstatements in the 1994 CFS. 

Accuracy and Completeness-Treasury does not maintain or control the accounting information from which the CFS is prepared. The individual Federal entities that submit 

the information to Treasury are responsible for the accuracy and completeness of the underlying information used to prepare the CFS. Treasury revised its process for compiling 

the financial information submitted by Federal entities during fiscal year 1994 which improved, to some extent, Treasury's ability to identify and make necessary adjustments to 

the submitted accounting information. However, for fiscal year 1994, onl){ 67 percent of 

the government's gross budget authority was subjected to financial audit. Furthermore, 

many of the audited Federal entities submitting information to Treasury received qualified opinions or disclaimers on their financial statements as a result of the audits. Accordingly, the information submitted to Treasury for preparation of the 1994 CFS may 

have contained additional inaccuracies which Treasury did not have a basis for adjusting. 

Complete implementation of the Chief Financial Officers (CFO) Act of 1990 and the 

GMRA should provide the needed audit coverage of the data included in the CFS. Treasury's action plan for preparing the audited consolidated financial statements includes 

procedures for the auditors to confirm that all information submitted to Treasury agrees 

with information appearing in the Federal entities' audited financial statements. While a 

framework is in place to address this issue, Treasury's process for preparing the fiscal 

year 1994 CFS did not provide reasonable assurance that material misstatements or 

omissions in the information received and included in the CFS would be detected. 

Accounting and Reporting-Although a comprehensive set of accounting and financial 

reporting standards for Federal entity financial statements are being developed, only a hierarchy of accounting principles contained in interim guidance issued by the Federal Accounting Standards Advisory Board (FASAB) was available to Federal entities and 

Treasury in fiscal year 1994. This necessitated Treasury consolidating information compiled by Federal entities using various accounting standards, which is not consistent 

with FASAB 's objective of providing reliable, consolidated financial information consistent with a common set of standards. 

27 
28 independent accountants' report cfs 

Such standards and criteria, which FASAB has developed, or is in the process of developing, and recommended to the Director of the Office of Management and Budget, the 

Comptroller General of the United States, and the Secretary of Treasury, include matters 

such as: (i) the extent to which actual and budget data are reported and reconciled, (ii) 

whether long-lived assets should be capitalized and depreciated, (iii) the accounting and 

reporting for public domain assets, (iv) how social security, pension plans, contingencies and unfunded liabilities should be recorded, and (v) how financial statements 

should be presented to meet the unique needs of internal and external users of Federal financial statements. The development of a comprehensive set of accounting and reporting standards for Federal entities' financial statements, and the appropriate application 

thereof, is required to improve the CFS. Additionally, accounting and financial reporting criteria specific to the CFS addressing matters such as consolidation principles and 

disclosure requirements are required. 

Consolidation and Analysis Process-Treasury revised its consolidation process for the 

fiscal year 1994 CFS which, to some extent, improved its ability to identify and make 

necessary adjustments to the information submitted by Federal entities. The revised 

process involves obtaining information from each entity electronically in a standardized 

format (i.e., each entity transmitted its information in conformity with the Federal Government's Standard General Ledger). The revised process also includes new requirements for entities to electronically submit financial statement disclosure information. 

These revisions improved the consistency of information submitted to Treasury and permitted additional analysis of the information by Treasury. As a result, Treasury was able 

to identify additional necessary adjustments to improve the completeness and accuracy 

of the submitted information. 

Notwithstanding the revisions to the 1994 CFS process, Treasury's preliminary action 

plan for preparing the audited CFS should be expanded to include matters such as (i) 

reconciliation and elimination of intra- and inter-entity amounts, (ii) policies for incorporating in the CFS all newly adopted and expected accounting standards and reporting 

requirements, including a discussion of the government's performance in relation to its 

established goals, and (iii) identification and resolution of CFS issues, such as legal matters and contingencies requiring coordination with entity management and general counsel, the Department of Justice, or Central Agencies. The inclusion of these matters in 

the action plan would provide Treasury a comprehensive approach for preparing the 

audited CFS. 

Most of these areas are not within Treasury's direct control. Consequently, resolving issues associated with the quality of information submitted by Federal entities and developing comprehensive accounting standards and a reporting framework must involve a 

concerted and sustained effort by the entire Federal financial management community. As 

reported by the Comptroller General of the United States on July 25, 1995, the Congress 

has set the foundation to provide much needed accountability and gain financial control of 

government operations through the CFO Act. Over the five years since the Act's passage, 

important progress has been made in obtaining audited financial statements. However, 

many remaining difficult issues must be addressed to successfully implement the CFO 

Act-particularly those related to the quality of financial information and the underlying 

financial systems and controls. Effective implementation of this legislation, with the continuing strong commitment on the part of the Congress and the entities' Chief Financial 

Officers and Inspectors General, as well as GAO, 0MB and Treasury, is essential to improve the reliability and meaningfulness of the government's financial information. 

We also noted certain other matters involving Treasury's system and process of preparing the CFS that we have not deemed as significant as the matters reported above. These 

other matters are being reported to the management of the Financial Information Manage-

ment Directorate in a separate letter. 

Washington, D.C. /7~.. V--~ L-,L, f, September 28, 1995 .___,.U ~ u 1 Financial Management: Momentum Must Be Sustained to Achieve the Reform Goals 

of the Chief Financial 

Officers Act (GAO/f-AIMD-95-204, July 25, 1995). 
cfs supplemental tables 

supplemental tables 

Additions to 

non-Federal 

economic resources, 

fiscal 1994 

The Government uses its resources to add 

to the physical and human resources of the 

Nation without acquiring physical assets. 

The table on page 30, compiled from the 

"Budget of the United States Government, 

Fiscal Year 1996," shows the amounts of 

these expenditures. 

Fiscal 1994 

Total: S134.4 billion 

Some of these investment-type 

expenditures, while not adding to Federal 

assets, add to the assets of State and local 

governments or private institutions. All are 

intended to enhance the future productivity 

of the Nation. 

Additions to State and local assets 

included construction grants for highways, 

community development, airports, and mass 

transit. Other developmental expenditures 

include outlays for education and training, 

and research and development. 

The chart below illustrates how the 

Government uses its resources to add to the 

physical and human resources of the Nation, 

without acquiring physical assets. 

Training 5% Other 3% Additions to 

State/local Science and \ ~-' -r----

engineering 5% "' 

Health 9% 

Environment 3% 

Education-income 

support 6% 

Education 16% 

23% 

Conservation 2% 

29 
30 supplemental tables 

Additions to Non-Federal Economic Resources 

for the Year Ended September 30, 1994 

(In billions of dollars) 

Additions to State and local government assets 

Community and regional development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 

Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 

Transportation: 

Highways and mass transit ... ... .. .. ... .. . ... . ... .. . . . .. .. . ... . . . . 21 .0 

Rail and air. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 

Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.4 

Other developmental expenditures 

Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 

Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 

Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 

Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 

Education-income support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 

Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 

Health. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 

Science and engineering . ..... .. ........ . .. . . . . .. · . . . . . . . . . . . . . . . . . . 7.3 

Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 

Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 .2 

Total developmental expenditures . ........ . ............ . . .. . . . . . . . . . 104.0 

Total additions to non-Federal economic resources. .. . .. . ... . . . . . . . . .. 134.4 

cfs 
cfs supplemental tables 

Estimates for 

tax expenditures 

in the income tax 

provide the same after-tax incentives if the 

expenditure program were administered as a 

direct outlay rather than through the tax 

system. 

This table shows tax expenditures that are 

considered revenue losses because of Federal 

tax law provisions that allow special 

exclusions, exemptions, deductions from 

gross income, or that provide for special 

credits, tax rates, and deferrals. 

Revenue loss estimates are not necessarily 

equivalent to the increase in Federal receipts, 

or the reduction in budget deficits, that would 

result from the repeal of the special provision. 

Revenue loss estimates do not take into 

account any additional resources required to 

For more information, see table 5-1, 

"Total Revenue Loss Estimates for Tax 

Expenditures in the Income Tax," in "Budget 

of the United States, Analytical Perspectives, 

Fiscal Year 1996." 

Estimates for Tax Expenditures in the Income Tax 

for the Year Ended September 30, 1994 

(In billions of dollars) 

Income exclusions 

Disability and retirement benefits (private) . ... ... ... .. . ........... .. . . . 

Medical care and insurance (employer premiums paid) .. .. .. . .. . .. ... . .. . 

Interest and dividends (State and local bonds and debt, and life insurance) . . . 

Capital gains at death ... ... . ... ... . .. . . .. . ......... .. . .. . . .... .. . . 

Social Security benefits ...... ..... . ........ .. .... . . .......... .... . 

Payroll benefits and allowances 

(group life, accident, and unemployment) . .. .. . . . ..... .... . .. .... ... . 

Foreign earnings and investment incentives (income earned abroad) . . ... . . . 

Education allowances (scholarships and GI benefits) ..... .. ....... .. ... . 

Other (e.g. , age 55 or over credit on home sales) . .. .. . . . .. . ...... .. ... . 

Income deferrals 

Real estate (home sales) . . ..... .. .... . .. . ... . .. . .. . ... . ... . ... . . . . 

Interest on U.S. savings bonds ...... .. . ....... . ... . . . ... . ... . ... .. . . 

Deductions and credits 

Interest (mortgage and consumer) ... . :., .. .... .. .. .. ........ . . ... . .. . . 

State and local property tax and other taxes .... . . . .. . . . .. ....... .. ... . 

Accelerated depreciation (rental housing, buildings other than rental 

housing, machinery, and equipment) .. .. ............... ....... .. .. . . 

Contributions (charitable and political) .. .. .. . . ..... ... .. .. ... . .. . .. .. . 

Earned income .......... . ...................... ..... . . .... . . ... . 

Foreign earnings (corporations doing business in U.S. possessions) . . . .. .. . 

Medical . .... . . .. . . ........ .. ... . ........... ... .. . ... . . . ....... . 

Work incentives (employment credits under work programs) 

and dependent care ..... . .... . . ..... . ........ . ...... . ..... . .. .. . 

Investments (commercial capital gains, credits, other investment incentives, 

construction period interest, and expensing developmental costs) .. ....... . 

Old-age, disability, and other personal exemptions ................. . . . . . 

Employee stock ownership plans (funded through investment and tax credits). 

Property damages and losses (casualty losses) .. .. ... ... .. ... . ... . .. . . 

Exemptions (credit unions) ....... .. .. .. .. .. .. .. . . .. .. . ........ . ... . 

Estimated 

amount of 

revenue 

loss 

64.7 

56.1 

29.0 

26.9 

23.7 

4.8 

4.4 

.9 

4.7 

16.6 

1.3 

48.4 

39.8 

23.9 

21 .5 

4.0 

2.9 

3.4 

2.8 

2.6 

2.4 

2.2 

.7 

.8 

31 
32 supplemental tables cfs 

Outlays for 

mandatory and 

related programs 

for programs whose budget authority is 

controlled by means other than 

appropriation acts or by entitlement 

authority and budget authority for the food 

and stamp program. 

The Government commits itself to 

provide benefits and services by passing 

laws that make spending mandatory. Outlays 

for mandatory programs consist of spending 

For further information, refer to table 

15-3, "Outlays for Mandatory and Related 

Programs under Current Law," in the 

"Budget of the United States Government, 

Analytical Perspectives, Fiscal Year 1996," 

pages 211 and 212. 

Outlays for Mandatory and Related Programs 

for the Year Ended September 30, 1994 

{In billions of dollars) 

Human resources programs 

Social Security .. .. ..... . .. . ... .. .. . . . .. . ....... . .. . .... . .. . .. ... . 

Income security . . ....... . . . . . .. ... . .. ....... . .... .. .. ... ...... .. ·. 

Medicare . . .... . . . ....... . ... . ... .... . .. . . . . .. . .......... . . .... . 

Health .. ..... .. ... . . .. . ... ... .. . . ... . . . . .. .. .. . ...... . .. . .... .. . 

Veterans benefits and services . . . ... . .. . ... . .. .. .. . .. . ........... . . . 

Education, training, and social services .... . . . . ... ......... . . . .... . .. . . 

Total human resources .... .. .. ... . .. . .. .... . ....... . .. . . ... . ... . . 

Other 

Other mandatory programs .. . . ............ ... . ........ ...... . . .. .. . 

Offset prior to the total mandatory programs . ... . .. .. .... ... .. . ... .. . . . . 

Total mandatory programs .... . . .. .. ....... .. .. . .. .... .... . .. .. .. . 

Net interest .. . .... .. . . ... . . .... .. .. .. .... ... . . . .. . .. ..... . . ... .. . 

Total . . .. . . .. ............ . ... . ..... . .... . . ......... • •. • .. ••• • •• 

316.9 

178.4 

141 .8 

86.6 

20.3 

9.0 

753.0 

-2.9 

-37.8 

712.3 

203.0 

915.3 
cfs 

Federal obligations 

"Obligations" are the basis on which the 

use of funds is controlled by the Federal 

Government. They are recorded at the point 

at which the Government makes a firm 

commitment to acquire goods or services 

and are the first of the key elements that 

characterize the acquisition and use of 

resources-order, delivery, payment, and 

consumption. 

In general, obligations consist of orders 

placed, contracts awarded, services received, 

and similar transactions requiring the 

disbursement of money. 

supplemental tables 

The obligational stage of Government 

transactions is a strategic point in gauging 

the impact of the Government's operations 

on the national economy. Obligations 

frequently stimulate business investment, 

including inventory purchases and 

employment of labor, to fulfill those 

Government orders. 

Disbursements may not occur for months 

after the Government places its order, but the 

order itself usually places immediate 

pressure on the private economy. 

For more detail, refer to "Object Class 

Analysis, Budget of the United States 

Government, Fiscal Year 1996." 

Gross Obligations by Object Class for the Year Ended 

September 30, 1994 

(In billions of dollars) 

Personal services and benefits 

Personnel compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.6 

Personnel benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2 

Benefits for former personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.1 

Contractual services and supplies 

Supplies and materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.9 

Rent, communications, and utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 

Travel and transportation of persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 

Transportation of things . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 

Printing and reproduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 

Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172.4 

Acquisition of capital assets 

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.6 

Investments and loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 

Lands and structures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 

Grants and fixed charges 

Insurance claims and indemnities . . . .. ...... . . .... . . ... . ......... . . . 

Grants, subsidies, and contributions . .. .. ... . . ... . . .. . .......... . . .. . 

Interest and dividends . . . .. . ... . ... . . ... . . .. .. .. .. . . ... . ... . . .. . . . 

Refunds ... . .. ..... .. . . . ... .. . .. .. .... . . ... .. . . ... . .. . . . . ..... . 

Other 

Undistributed U.S. obligations .......... .... .. ... . . ... .. .. .. . . . . . .. . 

Total direct obligations . . . . ..... . .... . ... . . . .. ..... . . .... .. .. ... . 

Reimbursable obligations . . ... .. .. . . .. .... . .. . . . ... . . . ... . .... .. . . 

Total gross obligations .. . ..... ....... .. ... . . . .. . ........ . .. .... . 

618.9 

380.3 

322.1 

12.2 

15.7 

1,845.5 

243.5 

2,089.0 

33 



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